Tax credits at work in the neighborhoods

The City’s Office of Economic Development (OED) has a range of tools to assist businesses and industries in Seattle, with creating jobs, vitalizing neighborhoods, and growing an ever-stronger economy. One of those tools is financial support through allocation of federal New Markets Tax Credits (NMTC). The City’s New Markets entity, the Seattle Investment Fund (SIF), received $51 million in 2008, then an additional $28 million in 2014 to invest in development located in or serving low income communities.

OK, banker-types, this part is for you — the federal NMTC program works by providing an interest-only, seven-year loan, for which approximately 30% is permanent equity that does not need to be repaid. In order to qualify, projects must be located in areas of the city where residents have low incomes and high levels of unemployment; be ready to build; include at least 20% non-residential income; and, preferably, create or retain jobs and serve as an anchor for further development in the surrounding neighborhood. Banks put up the money in the NMTC pool and, in return, receive a tax break from the federal government.

I serve on the SIF committee as chair of the Council’s economic development committee. We review the applications for these funds and approve the investment decisions. Here’s where we’re investing the City’s most recent $28 million allocation:

Washington Hall: $9 million

Since opening in 1908, Washington Hall has hosted theater, dance, boxing matches, jazz performances, punk shows and everything in between. Billie Holiday performed there, as did a young Jimi Hendrix. My favorite memories of Washington Hall are from its time as home to On The Boards in the 1980s and 1990s. Located near 14th and Yesler, the building was designated as a landmark by the City and is currently home to the arts and community-based nonprofits 206 Zulu, Hidmo and Voices Rising. However, the building is in need of significant repair and renovation. The NMTC will make it possible for this historic building to continue to serve the community today and into the future.

Neighborcare’s Meridian Center for Health: $9 million

Located in the Northgate Neighborhood, the Meridian Center will provide integrated health and human services to low income patients through partnerships with Seattle/King County Public Health and Valley Cities Medical. This new facility will replace and expand the existing Neighborcare center in Greenwood and contain the existing Public Health Center that’s currently onsite. The Meridian Center will include expanded primary care, a new dental clinic, mental health and recovery services, nutrition services for women, infants and children, maternity support, and more. 

The Pacific Tower Community Health and Innovation Center:  $10 million

The Pacific Tower, located on North Beacon Hill, has had a storied history as a Marine hospital and the former home of Amazon before Amazon found South Lake Union. The building is owned by the Pacific Hospital Public Development Authority with rent proceeds funding grants to groups working to close health disparities in King County. That funding happens only if the building has renters, though. The new Community Health and Innovation Center pays rent AND trains the next generation of healthcare staff for our region. The State’s Department of Commerce has signed a lease for 13 floors of the building (a PacMed clinic operates on the ground floor). Commerce has an agreement with Seattle Central College to expand and consolidate their health care education and training programs in the tower; Neighborcare for administrative offices and to create an on-site dental teaching clinic; Cross Cultural Health Care Program for medical interpreter training; Building Changes for their work on housing solutions; Fare Start to expand its culinary training program and produce meals for students and low-income people; and a host of smaller nonprofits. The Seattle Central College expansion will be significant, including three new programs in Nursing, Community Health Education, and Community Healthcare Services Management. They expect to increase enrollment by a whopping 67%.  

We approved investments in these projects because they meet the basic requirements, but, also, because each will be a catalyst in a neighborhood and in industry. None of these are great candidates for conventional financing. New Markets Tax Credits have proved to be a critical tool for the City to assist projects like these. I have my fingers crossed that Congress will see value in approving another round of tax credits so Seattle can apply and continue investing in projects that keep our history alive, bring health care to those who need it, and train the workforce of the future.

Visiting YouthBuild.

Guest post by LaTonya Brown, Legislative Aide

Sally and I visited YouthBuild, a nationally recognized pre-apprentice construction training program housed at the Georgetown campus of South Seattle College. This was an amazing and heartfelt tour that every public agency contractor and labor group should invest the time to attend. We were joined on the tour by other City of Seattle staff. King County, Sound Transit, Port of Seattle, Port Jobs, Turner Construction and Mortenson Manson, the prime contractor on the Seawall.

Councilmember Sally Clark crouching down in a timed tape measuring contest with Marie Kurose from the Port of Seattle. Councilmember Clark was declared the winner. Great job Sally and Marie!

What is YouthBuild?

YouthBuild, part of YouthCare, is a 6-month paid pre-apprenticeship construction training program designed to help young adults earn a GED while establishing a clear path to a high-paying career in the construction industry. Participants have to be 18-24 years old, low-income and out of school but seeking a diploma, and legally authorized to work in the United States. As a part of the program, participants receive educational support, job readiness, community service and leadership training skills while getting real money and real experience.

Why is it important?

Young people need a goal to work towards that produce real results and portable skills into future.  Programs such as YouthBuild give young people who are often faced with systemic and racial barriers a chance to become their own advocates by becoming self-efficient in ways some young people thought was impossible.  With the recently passed Priority Hire legislation, the tour was a great starting place to see the impact and vision come true for so many young adults who want to work in the construction field in Seattle.

How to get involved

Young people who come to YouthBuild come for a variety of reasons and from a variety of places in the city.  These youth are looking to better themselves and are ready to take the next step in their lives. If you are a young adult wanting to make a commitment to work, education, and your community, YouthBuild  may be right for you.

We’re particularly excited about YouthBuild’s success since they will be one of the pre-apprentice programs feeding people into the new Priority Hire program. Through Priority Hire, YouthBuild grads will test into the trade or craft of their choice and become full-fledged apprentices on the way to journey-level careers. That means better pay, benefits and meaningful work to support themselves and their families.

What a great presentation and tour led by YouthBuild cohorts!  I was proud to be invited!

Continuing the foreclosure fight

At the top of the year I’m lining up committee and “special project” priorities for 2015. We’ll launch new initiatives this year, but several projects started in 2014 will carry over. One of these projects focuses on foreclosure prevention, specifically mortgage principal reduction as a way to keep people in their homes.

Zillow reports that for 2014 approximately 16% of homes in King County were in negative equity. That means the owner is “underwater” – the mortgage amount is more than the current value of the home. In a subset of those cases the owner is underwater and behind on mortgage payments. In recent months home values in Seattle have risen helping many people rise above the water line, but still too many are left under. Some are weighed down by the lasting effects of pre-recession over-heated home prices. Those prices lead to high mortgages with unsustainable terms. Definitely not the financial security homeownership is supposed to give.

There are ways to assist underwater homeowners and I figure we should put those options into action as aggressively as we can. Councilmember Licata and I have teamed up on this work.

First, we rearranged money in the last quarter of 2014 to fund more aggressive outreach to people underwater and behind on their payments. We know from experience that people have a much better shot at keeping their home — and even at principal reduction in some cases – if they have professional help when facing their lender. No one should try to deal with being underwater or being behind on their mortgage payments or actual foreclosure without the help of a financial advocate. We pushed a quick $150,000 out to community based agencies to contact every homeowner in Seattle we can find who is underwater and behind on payments.

Concurrently, Councilmember Licata and I, with huge help from staff and advocates, started working on how to get a principal reduction fund operating in Seattle. Models for this exist in Boston and in Oregon, so how hard can it be to get something going here?

As it turns out, harder than I originally thought.

Principal reduction is the holy grail of help for underwater home owners. Before the recession too many people signed on for mortgages at unsupportable high values. Court records in too many parts of the country show that many lenders knew this and took advantage.

For many of us principal reduction is the right answer because it’s the yin to the bank bailout yang. Big banks received help, why shouldn’t individual homeowners? Many people in this crisis want to pay their mortgage and can pay a mortgage. They want to keep their home. The combination of aggressive lending and inflated values proved a trap. That trap is bad for individuals, families and neighborhoods.

As you might imagine, principal reduction generally isn’t favored by lenders. However, “solving” for people underwater and behind on their payments should help banks avoid costly foreclosures and, frankly, bad PR. The moral and financial reasons for lenders to consider principal reduction are strong.

So, what have we done do far?

  • Late last summer we hired an expert from the Oregon experience to draft a report on how the two existing models in Boston and Oregon work and detail how a Seattle fund could work. This is a document we can share to educate potential operators and funders.
  • We’ve met with the operators of the Oregon program. That was super helpful, but also reinforced how complex program set-up and the transactions themselves can be. Also, the Oregon model operates in only four counties in Oregon.
  • We’ve met twice with Craft3, a community development financial group, possibly interested in bringing the Oregon model into Washington. Neither the Boston nor Oregon model is operated by the government.
  • We’ve briefed representatives from the Washington State Housing Finance Commission and the United States Department of Housing & Urban Development. HUD is especially important because of the way mortgages are insured and who needs to sign off on a repackaged loan.
  • We met in October with the State Attorney General to explain the proposal and seek help with funding. We’d need a few million dollars to get going (figure each mortgage re-write involves $200,000-$300,000) and we enquired about national mortgage settlement funds. Washington didn’t receive federal Hardest Hit dollars after the initial mortgage crisis fallout and, so far, dollars from lender settlements that do include Washington have been allocated to non-profits in the state helping homeowners with counseling and legal aid. The door isn’t totally shut here, but there was no magic box of money at the AG’s office.
  • With the Seattle Foundation we hosted an information session in early December for lenders, foundations and other institutions who might be interested in supporting this project. The Oregon program operators attended and explained how the principal reduction transactions work and how the new loans are then bundled and sold to responsible banks for long-term holding and servicing (someone has to mail you your payment coupon every month). HomeStreet, Bank of America, Washington Federal, BECU and Wells Fargo attended this first session and asked serious questions about risk, eligibility screening, attractiveness of the loans on the secondary market and more. We will be continuing these conversations in the next couple of months.
  • Staff is continuously working to get information about how national mortgage settlement dollars are being spent to see if we can attract unallocated dollars to this proposal.

In the meantime, the future of the Oregon program has become murky. Currently, the program revolves the money – re-writing troubled mortgages, selling them to a reputable bank and then using that money from the sale to go out and re-write more mortgages. However, the federal funding that they have been revolving is officially due back to the feds at the end of 2017. So, while they are asking the federal Treasury for permission to keep using and revolving the funds, our nearest great model may be in peril unless other funds become available.

So why not switch our focus to the Boston model? We might have to do that. The Beantown model utilizes grants and loans from individuals and foundations through a community-based fund. No matter which model we adopt, finding the funding is the top challenge.

A number of people work hard on this issue, including an advocacy group called SAFE (Standing Against Foreclosure and Eviction). SAFE would like Seattle to condemn underwater mortgages, repackage the loans at lesser amounts, and get them back to the homeowner who was underwater. This would be a way of giving direct relief to homeowners who have struggled to get help from the banks and financiers, some of whom knew full well that the mortgages they were writing would prove too heavy and bring down individuals and families all over the country.

Unfortunately, mortgage law is heavily regulated at the federal level and any attempt by a city to condemn a mortgage (not the home, but the mortgage) would end up in the courts for years. A financial boon for attorneys, but not for homeowners.

And that’s where we are as we start 2015. Yes, rising home values mean that as of last month fewer people in Seattle are underwater, but there are still many, many people in need and I’m committed to doing what I can to help.

A week in Councilmember Clark’s office

Guest Post by Hallie Huffaker

Coming in as a weeklong intern randomly in December with no experience in government work, I was not expecting much from my time in Councilmember Clark’s office. However, I was blown away with the amount I have been able to see, learn and help out with despite my lack of experience and young age. Sally Clark and her three legislative assistants went above and beyond to give me an insider’s perspective on the city council.

As I walked up City Hall’s picturesque stone staircase, I was struck by the majestic building’s beauty. Only a few minutes after meeting LaTonya Brown, one of the LAs, I was shown around a floor full of friendly faces. I was amazed by how each person, from LAs to analysts, took the time to step away from their work and introduce themselves to me. I even chatted with Council President Tim Burgess!

Within an hour of my arrival, I was able, without any prior experience or knowledge, to attend the council briefing on the tunnel project, a hot-button issue. During the briefing I was party to the most updated reports on settlement observation in the Pioneer Square area, as well as information about Bertha and the tunnel project. I sat in the audience amongst members of the State Department of Transportation and got to exit through the special council staff doors (using my “Legislative Department” pass). The access that I was allowed was incredible.

I quickly realized that I would not be just sitting around while I was here. Right away I was shown to my own desk, complete with a stack of mail to file and access to Sally’s emails. Jesse Gilliam, another of the LAs, gave me research tasks to work on while I was not attending meetings and doing office work.

Since Sally was traveling during my first day, I met her on Tuesday. Sally was far from intimidating; she immediately she made me feel at home, allowing me to tag along to most of her meetings, both small office ones and large committee briefings, including one with the Mayor and the Speaker of the House! During meetings, Sally always made sure to introduce me to everyone at the table, making me feel like a part of her team.

My first project was categorizing the emails that Sally had received from constituents about the tunnel and compiling them into a report. Since the LAs were so approachable, I never felt nervous to ask questions. Because of their guidance, two days into my time I was able to make a substantive contribution to the team!

By my third day it almost felt natural to walk up the steps of City Hall. It was a slower meeting day than Tuesday, so I focused on desk work. I opened the stack of mail that comes at least twice a day for the councilmembers, before sorting the mail in order of importance for Sally. This helped me glimpse the kind of events and requests (and holiday cards!) councilmembers receive.

Next, I was given the phone tutorial, which is more complicated than it sounds. Even during a slower week like this one, constituents call daily with concerns, problems and requests for the LAs and Sally to deal with. Only a few minutes in, the phone rang with someone calling about a housing problem. After a quick moment of panic, my confidence grew as I asked questions and took down the constituent’s information, slowly getting the hang of things.

Although there is not an easy fix to everything, the LAs know who to contact and where to look for answers. They told me where to direct the complaint, and it was gratifying to feel like I had done something tangible to help someone in need. The council members do their jobs to help better the lives of Seattleites, and being in the office I was able to see how much effort it takes to make that happen.

Bright and early Thursday morning was a meeting of the Committee on Housing Affordability, Human Services and Economic Resiliency that Sally chairs. The public meeting took place in the council chambers. I arrived early with Jesse to help set up and make sure that everything would run smoothly. We opened the doors to the public, manned the comment sign-up sheets and checked microphones. Jesse used his free time to give me the inside scoop on how committee meetings work. So much more goes into these meetings than meets the eye!

Sally introduced and thanked me in her opening statement to the roomful of community members. It was little things like this that Sally continuously did during my week in her office that really made the experience special. The first 20 minutes of the meeting were reserved for public comment, when constituents can come up and have two minutes to voice their concerns to the council. Sally listened to each one carefully, asking some for follow-up information and calling those she knew well by name with friendly smiles and jokes. Despite the formal trappings of the event, the room had a warm, community-like feel.

This week in Sally Clark’s office was so much more than I expected. It was invaluable to have exposure into the daily lives of the councilmembers and their staff. I was amazed at how the work never ends; there is always more work to do, more people to meet with, more constituent concerns to respond to, but everyone meets the challenge head on. They were welcoming and dedicated to giving me the best education possible during my brief time here. The atmosphere on the second floor of City Hall was friendly and cheerful, despite the huge responsibility that its inhabitants carry daily. This week passed much too quickly…is it really over already?

Hallie is a graduate of Garfield High School and a sophomore at Dartmouth College. She’ll study in Italy next quarter and look for an internship in Washington DC next year. Thanks, Hallie!

Housing affordability committee needs your voice

The City took our first steps this past September toward creating a plan for housing –particularly affordable housing — in Seattle by launching a Housing Affordability and Livability Advisory Committee. The group has until the end of May to report back to the Mayor and Council with a vision and recommendations for how to achieve that vision. They kicked off their work by hosting three community listening sessions at the end of November and beginning of December, one each held in in Rainier Valley, the Central District, and Northgate. Attendees participated in an electronic survey with real time results, and then had time to take in data on the City’s growth and existing programs, as well as give feedback to the advisory committee members, staff, and councilmembers who stopped in (including me).

If you were not able to make it out to one of these sessions, it’s not too late to add your voice. The survey will be online through mid-January. You’ll miss the real-time group results (and the snacks), but we’d appreciate your participation.